Journal of Economics and Management Volume 21, No. 1 March, 2025

Exploring Key Factors in Corporate Merger and Acquisition Decisions from a System Dynamics Perspective

Tsai Wen-Chun

Business Administration, Feng Chia University, Taiwan

This study examines the impacts of operational performance, synergy effects, market competition, corporate sustainability policies, and internal communication on merger and acquisition (M&A) decisions and long-term development from the perspective of System Dynamics (SD). Traditional M&A decision-making methods, often reliant on stable market conditions, are increasingly limited in dynamic and complex environments. This research develops a comprehensive SD model, analyzing four key causal loops: the effect of operational performance on investment attractiveness, the synergy effect of M&A decisions on market competitiveness, and the impact of internal communication on M&A decisions. The model's validity and practical applications were demonstrated using a case study of a renowned Taiwanese optoelectronics company. The findings reveal: (1) Operational performance is critical for attracting investments and fostering long-term development. Strong operational performance enhances profitability and market competitiveness. (2) Synergy effects significantly enhance market competitiveness. (3) When market confidence declines, companies may experience deteriorating operational performance and seek alternative, more promising, or stable investment targets to diversify risks. (4) Effective internal communication within organizations enhances decision-making quality and profitability.

Keywords：System Dynamics, Merger and Acquisition, Corporate Social Responsibility, Synergy Effects

JEL Classifications：M0, M1, G3

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